News Alert - RP Data/Rismark International Home Value Indices

News Alert - RP Data / Rismark International Home Value Indices

Released Friday 30  July - 11am

What to expect from the results this week with Tim Lawless - RP Data National Research Director.

The last two months of RP Data – Rismark Index results have seen home value growth stall in a market slowdown that was predicated by higher interest rates, lower auction clearances and slowing housing finance.  The scenario has not changed over the last month and we expect home value growth to have remained relatively flat during June.  The added uncertainty brought on by the Federal Election and speculation that interest rates may move higher on the back of higher inflation is likely to add to the slower market conditions.

Christopher Joye - Rismark International Managing Director comments:

This week we will get the June quarter house price data from the three major index providers: RP Data-Rismark; APM; and the ABS.

With so much conjecture about house price bubbles doing to rounds, which, frankly, appears to be a universal constant in our public dialogue these days, the next release will offer a fascinating perspective on what is actually happening in the market.

Since October last year we have been projecting a significant cooling in conditions back to single-digit growth rates. In the 12 months to end March 2010, Australian dwelling prices rose by a frisky one per cent per month, or 12 per cent in annualised terms. It took perhaps a little longer than we expected for the normalisation in mortgage rates from their low of 5.75 per cent during the GFC to the historically average-looking rate of 7.4 per cent to bite back into housing demand.

But the evidence is increasingly clear. In RP Data-Rismark’s monthly data (APM and the ABS only report quarterly) we have identified the first signs of a deceleration in capital growth, which the RBA has pointed to. On a seasonally-adjusted basis, RP Data-Rismark recorded dwelling price growth across Australia’s capital cities of just 0.4 per cent and 0.5 per cent in April and May, respectively. That is, residential property price gains had halved from their rapid 2009 pace.

The question now is what happened to house prices in the June quarter. Since we already know the results of two-thirds of the data for the second quarter (ie, April and May), which generated total growth of just one per cent, it is a fair bet that the second quarter results are going to be substantially less than the first quarter outcome of 3.4 per cent (on a seasonally-adjusted basis).

Mitch Koper
National Media & Communications Manager
T:           07 3114 9999
E:           mitch.koper@rpdata.com
W:           www.rpdata.com